Burnet school district officials have created this informational graphic to help explain to voters the upcoming Tax Ratification Election, which would help cut the overall district property tax rate while adding revenue to the general fund. Courtesy graphic

BURNET — With the state of Texas eyeing as much as $2.7 million of Burnet Consolidated Independent School District’s local tax money over the next two years, district officials are asking voters to approve a move that would not only lower the school property tax rate but also create $600,000 the so-called “Robin Hood” plan won’t be able to touch.

“For the first time in history, BCISD will be subject to recapture from the state,” Superintendent Keith McBurnett said.

By “recapture,” McBurnett is referring to a part of the state of Texas’s school finance law that allows the Texas Education Agency to require property-rich school districts to send locally generated property taxes to the TEA for redistribution to poorer school districts. It’s officially called Chapter 41 but is more commonly referred to as “Robin Hood.”

Under Robin Hood, BCISD is looking at sending $500,000 of locally generated tax money to the state for redistribution during the 2018-19 fiscal year. That number jumps to $2.2 million in the 2019-20 fiscal year.

BCISD officials have come up with a plan that would generate $600,000 for the district and lower the overall school tax rate by 2 cents. This additional funding would not be subject to the state’s recapture.

However, to make it all work, BCISD voters must approve the Tax Ratification Election on Aug. 25, which would move 2 cents from the district’s interest and sinking (I&S) — sometimes called “debt service” — side of the tax rate to the maintenance and operation side while dropping another 2 cents of the I&S portion. This would take the BCISD tax rate from its current level of $1.28 per $100 property valuation to $1.26.

If it all sounds like sleight of hand, it’s not; it is sound financial management during the past several years then waiting for the best time to invoke the district’s two “golden pennies.”

The first step to understanding how, and why, BCISD officials can do this is the tax rate itself. Texas public school districts use locally generated property taxes to fund the bulk of their budgets. The tax rate is broken down into two parts: maintenance and operation and interesting and sinking.

Maintenance and operation (M&O) supports the day-to-day operations of a school district, including teacher salaries and fuel for buses. Interest and sinking (I&S) supports a district’s longterm debts, typically taken on through bond projects.

The state caps district M&O rates at a maximum of $1.17 per $100 valuation, but within that number are three levels, or tiers, to which Chapter 41 districts must pay attention. The basic Tier 1 refers to the first $1 per $100 valuation. If a district’s property wealth per student exceeds a certain point, the state comes in and snatches up “excessive wealth” by requiring Chapter 41 districts to send this excess to the TEA for redistribution.

BCISD has reached that precipice.

The $500,000 the Burnet school district will send to the state in the upcoming fiscal year comes from this excess as will the $2.2 million the following year and possibly more in years to come.

Tier 3 refers to the 11 cents from $1.06 to the $1.17 cap. School finance officials sometimes call these 11 cents the “copper pennies” because they are subject to recapture at a higher rate than Tier 1 funds.

That brings us back to Tier 2, the 6 cents that can take a school tax rate from the $1 to $1.06, or a number in between. These are the “golden pennies” in that they are not subject to recapture. Any tax money a Chapter 41 school district generates from these 6 cents stays in the district.

Under state law, a school board can tap the first 4 cents of these six golden pennies on its own. The BCISD board has done that, which gets the district’s M&O rate to the current $1.04 with the remaining 24 cents of the $1.28 overall rate coming from the I&S side.

To use those last two golden pennies, BCISD needs to ask district voters to approve applying them. And that’s what McBurnett and the BCISD board are asking voters to do in the special election Aug. 25.

But the plan also calls for dropping 4 cents from the I&S side, or shifting two to the M&O side as the two golden pennies and shedding the other two completely from the tax rate.

This would bring the BCISD tax rate to $1.26, down from the current $1.28 rate. It would generate an additional $600,000 for the district, which would not be subject to recapture, and would help offset the impact of the upcoming $500,000 recapture payment to the state.

The additional M&O funds generated by these 2 cents would be used for teacher recruitment and retention; safety and security of students and staff; and maintaining and expanding educational programs.

BCISD is able to deduct 4 cents from its I&S rate due to the efforts of the board and school administration through good financial management to pay down debt in a manner that has saved the district money through less interest payments. Also, this has given the district the flexibility to move the 2 cents to M&O and drop another 2 cents from the tax rate.

It’s also about tapping the final golden pennies at the right moment.

“I think it’s important for the community to understand that the board has had access to these two pennies since 2006, but they didn’t want to do so until absolutely necessary,” McBurnett said. “This is the time to ask the voters for those two pennies.”

While the state now classifies BCISD as property rich, that’s not necessarily reflected by the student body. McBurnett said about 60 percent of BCISD students are considered economically disadvantaged. The Chapter 41 assessment, he pointed out, has no relation to the percentage of economically disadvantaged students.

“This is all because of a broken school finance system,” he added. “The state has not kept up with its obligation to fund public education.”

BCISD officials are hosting informational meetings for the public and organizations to share the plan and answer questions. Officials are meeting with the Rotary Club of Burnet at its July 18 regular club meeting and the Kiwanis Club of Burnet on July 19.

The next public meeting is 8 a.m. Thursday, Aug. 2, during Coffee with the Superintendent at the BCISD Parent Resource Center, 202 E. Brier.

McBurnett said if there are organizations that would like a BCISD district representative to attend one of their meetings and discuss the TRE plan, they can contact the district through the same email address.